Fiscal stimulus package fails to provide succour to the poorest: Opposition

Senior Congress leader P Chidambaram said the need of the hour was to put money into the pockets of the people, particularly the poorest 130 million people

The Congress and other Opposition parties on Wednesday said the Centre’s fiscal stimulus package fails to provide succour to hapless migrants, to the poorest, and even state governments confronted with financial crunch. They said the package will not help spur demand and consumption.

Senior Congress leader P Chidambaram said the need of the hour was to put money into the pockets of citizens, especially the poorest 130 million, but the package has nothing for them. Before the package was announced, he dubbed the prime minister’s announcement as a “headline and a blank page.” He later said there was nothing in the package for middle classes.

He said his “generous” calculation is that the package announced amounts to Rs 3.6 trillion in the Rs 20-trillion stimulus that the prime minister promised.

 

 

“Where is the rest of the Rs 16.4 trillion? This government is a prisoner of its own ignorance and fears,” he said. Chidambaram said the government must not only spend and borrow more, and allow states to do it as well, but it is not willing to do so. “Except for the modest MSME package, we are disappointed with today’s announcements,” he said. Chidambaram said liquidity-related measures do not amount to fiscal measures of support and nowhere in the world are they included or counted in a fiscal stimulus package.

West Bengal Chief Minister Mamata Banerjee said the Centre’s package is a “big zero and an eyewash”. “People don’t get any monetary support, the states didn’t get anything. There is no public spending to boost the economy or no indication of boosting the health infrastructure was mentioned either,” Banerjee said.

Communist Party of India (Marxist) chief Sitaram Yechury termed the package a farce. He said the country is witnessing “the pettiest form of politics from the Modi government”. He said there is nothing in it for the state governments, or for the migrants who urgently and immediately need help. Chidambaram said the support measures announced for MSMEs were skewed in favour of the larger MSMEs, about 4.5 million, while the bulk of 63 million MSMEs were left high and dry.

He welcomed the offer of subordinate debt and equity corpus fund. “But we will await the ‘terms and conditions’.  The devil is in the detail.”  Chidambaram said he opposed the labour law changes at the current juncture of crisis. He said it was also not the time to worry about fiscal deficit, and the government’s additional borrowings since March will take it to 5.3 to 5.4 per cent if the GDP remains constant, but the GDP is set to decline. The answer, he said, was to monetise part of the fiscal deficit. He said the government should put money in the hands of the poorest and then start addressing issues sectorally.

 

 

Chidamabaram said he hoped the finance ministry will note include the Rs 1.7 trillion announced earlier because that was effectively Rs 1 trillion, of which Rs 60,000 was cash transfer. He welcomed the change in the definition of MSMEs. He said we should not mix up foreign-sounding names with foreign -manufactured products as even several foreign brands were completely manufactured in India by local entrepreneurs and labour.  Banerjee said the package is only worth Rs 4.2 trillion, around two per cent of the GDP. Over relaxations given on income tax filing, Banerjee said people musn't think it as a benefit. “If people aren’t able to go outside because of lockdown, from where are they going to file returns? It is nothing”. 

Kerala’s Finance Minister Thomas Isaac said if the package is a fair sample, the Rs 20-trillion stimulus is going to be deeply disappointing. “The actual outflow of resources directly from the budget is only around Rs 30,000 crore. At least the interest payment of MSME sector during the moratorium  could be waived,” he said .